Named after investor Charles Ponzi, a Ponzi scheme is a form of financial fraud similar to a pyramid scheme. It involves promising no-risk, high-return investments without actually investing the money in a business, product, or stock. Instead, the perpetrator pays back initial investors with funds paid by new investors.
If the government has pressed charges against you for alleged involvement in a Ponzi scheme, you are entitled to defend yourself in court. A skilled fraud attorney can provide you with a robust defense. Talk to an Omaha Ponzi scheme lawyer today to discuss your legal options.
How Does a Ponzi Scheme Work?
A Ponzi scheme is a fraudulent investment scam. These schemes can involve the promise of easy returns through various offerings, such as mutual funds, securities, hedge funds, or even gold bars.
The central aspect of a Ponzi scheme is that the perpetrator does not pay back investors from their investment profits. The person operating the system never invests the money he or she receives. Instead, the perpetrator keeps the invested capital for his or her own enjoyment.
To avoid detection, the operator will eventually pay back the original investors using money from new investors. This creates a perpetual loop of covering up the scheme by paying off one investor and simultaneously defrauding another.
Anyone could face accusations of operating a Ponzi scheme. However, these allegations typically target investors and other individuals involved in the financial services industry. Law enforcement may implicate hedge fund managers, investment advisors, or even attorneys in these schemes.
Allegations of operating a Ponzi scheme can carry severe consequences. In addition to the potential of criminal charges, these accusations could end careers and ruin businesses. If you were accused of operating a Ponzi scheme, you should speak with an Omaha attorney right away to fight your charges and protect your reputation.
Laws Against Deceptive Trade Practices in Omaha
Ponzi schemes are often prosecuted under federal law. However, state statutes also prohibit this form of investment fraud. Ponzi schemes fall under the Uniform Deceptive Trade Practices Act codified in Nebraska Revised Statute Section 87-302(a)(13). The statute outlaws pyramid schemes and similar forms of financial services fraud.
Penalties Upon Conviction
A violation of the Uniform Deceptive Trade Practices Act is treated as a Class II Misdemeanor under state law. A conviction for a Class II misdemeanor carries a fine of up to $1,000 and as much as six months behind bars. A lawyer with experience defending Ponzi scheme cases can help you fight to avoid a conviction.
Ponzi Schemes vs. Multilevel Marketing
Often, law enforcement officers accuse multilevel marketing (MLM) businesses of operating Ponzi schemes. Though MLM businesses recruit investors similar to recruitment in Ponzi schemes, they profit from the sale of real products or services. Multilevel marketing businesses are legal because they do not violate deceptive trade practice laws. An experienced defense attorney can defend your multilevel marketing company against charges related to Ponzi scheme operation.
Talk to an Omaha Ponzi Scheme Attorney About Your Case
If you are running a valid business, it is crucial to clear up misconceptions about an alleged Ponzi scheme as soon as possible. By demonstrating to the authorities that your company does not use deceptive trade practices, you could effectively fight your charges.
That said, you should never contact the police on your own. Law enforcement can use your own words against you in their effort to convict you of a crime. An Omaha Ponzi scheme lawyer can aid you in your defense. To get started, contact Berry Law and schedule a confidential consultation today.